Charlotte Aguilar-Millan publishes her second blog post in our Emerging Fellows program. She inspects the impact of digitisation on corporate structures. The views expressed are those of the author and not necessarily those of the APF or its other members.
What if the option to earn the same amount of money as you do now was offered to you, but rather than working over a 12-month period, this money was generated in only 9 months? This flexibility is becoming ever more present in workers lives as a result of the rise of a new concept known as the ‘gig economy’. The term gig economy was once uttered with fear due to the instability of short term contracts. However, with the rise in skilled labour adapting to the gig economy, it is now a growing platform with which businesses are expected to adapt.
The gig economy can range from those working on zero hour contracts such as the likes of Uber and Deliveroo, to areas in which seasonality can be seen within skilled professions. With the introduction of websites such as Hourly Nerd, Upwork, Freelancer and Fiverr, professional careers are now appearing as part of the gig economy. This includes tasks such as copy writing, accountancy, translation or even coding.
Take Upwork, for example, where roughly a decade ago two friends in Silicon Valley created this platform. Today it has grown to now being listed on the Nasdaq. Upwork remains free to post advertisements requesting specialist work. This gives the gig worker the flexibility to submit a bid for work within a timeframe that suits them. The platform then offers a paid tier for a more specialist pool of workers. From the gig worker, Upwork then deducts a set percentage of the fee, linked to the amount billed. Upwork provides an interview process and handles payment securely for clients. Both parties can feel secure that the advert posted is authentic, and that the specialised skill offered is also authenticated through Upwork’s vetting process.
So why are we all not signing up to the gig economy? This short term contract culture has created more instability over a worker’s long term future. Gig economy workers can find it harder to navigate life events – such as buying a house – when there is no guarantee of a fixed income. The gig economy itself has expanded labour market competition to bidding for advertised work. Not only from those within the same country, but also accessing a global pool of gig workers. This means that those in developing countries are able to provide the same services for much lower prices. Gig economy workers in more developed countries are finding that their services can be easily undercut on price, and they must either develop a specialist niche or accept lower pay to stay competitive.
The long term effects of the gig economy could also create negative futures. Governments have shown little innovation in how the gig economy could affect future tax revenues. Which country will receive the corporation tax if a company in the UK hires a gig worker from Singapore, but pays using a platform based in the US? Policymakers have a much slower reaction time to these changes in the employment market.
Corporations have taken this evolving landscape of work and altered their business models. It is no longer a requirement for successful companies to pack all staff within office buildings. There has been a decline in requirements for office space in the typical corporate structure as a result of digitisation. With staff able to work from home or contractors only made use of when required, a disembodied company is now emerging.
The disembodied company sees that large areas of work are seasonal and as a result having an office full of workers is not cost effective. Digitisation has allowed companies to disperse their staff away from the old structure of all being based in one building. They have adapted to new policies such as home allowances to assist staff to pay for home bills whilst working from home.
The gig economy helps companies make it easier to search for talent and reduces employment costs. It also means that work for the gig economy worker can fit in with their lives. Further, gone are the days of the toxic boss and navigation of office politics given that contracts typically are short term allowing for non-renewal if one party wishes. If a gig worker wants to work longer hours in one month to take the other off, the flexibility
Overall digitisation is allowing a reduction in face to face communication where the same workers are no longer needed to collaborate effectively by being in the same vicinity. Instead, by companies effectively utilising technology, a typical office structure is no longer needed. The gig economy is seeing unprecedented growth particularly for those who desire flexibility over security. This is fundamentally changing the way in which companies operate. It is now up to legislation to adapt to these new work dynamics as companies evolve with the use of the gig economy.